The rupiah\u2019s exchange rate continued to be pressured higher amid\nintensifying global geopolitical tensions and rising global economic\nuncertainty. The rupiah briefly weakened to a record low, piercing Rp\n17,700 per US dollar. On Thursday, 21 May 2026, the rupiah stood at Rp\n17,686 per US dollar. The rupiah strengthened after Bank Indonesia (BI)\nraised the BI Rate by 50 basis points to 5.25 percent on Wednesday, 20\nMay 2026.<\/p>\n
Rising import prices, increased pressure on the state budget, and a\ndecline in household purchasing power are effects that are starting to\nbe felt.<\/p>\n
UGM economist Rijadh Djatu Winardi from the Faculty of Economics and\nBusiness at Universitas Gadjah Mada said the rupiah\u2019s weakness at\npresent results from the accumulation of various global and domestic\npressures arriving simultaneously. He termed this condition a \u2018perfect\nstorm\u2019 that magnifies the rupiah\u2019s pressure.<\/p>\n
Domestically, there are seasonal and structural factors that also\nworsen the rupiah\u2019s pressure. One such factor is the dividend payout\nperiod to foreign investors, which routinely increases demand for\nforeign exchange. In addition, rising market concerns about the\ngovernment\u2019s increasingly constrained fiscal space are also seen as\ndriving up perceptions of risk to the Indonesian economy.<\/p>\n
\u201cThe combination of global and domestic factors is what makes the\nrupiah\u2019s weakness feel sharper,\u201d he said.<\/p>\n
According to Perry, the domestic economic fundamentals remain\nrelatively strong. This is reflected in Indonesia\u2019s first-quarter 2026\neconomic growth of 5.61 percent and an annual inflation rate of 2.42\npercent. \u201cThe current exchange rate is undervalued. Undervalued and\ngoing forward we believe it will stabilise and strengthen. Why\nundervalued? Our fundamentals are strong,\u201d Perry said at a press\nconference of the Financial System Stability Committee (KSSK) at Istana\nMerdeka, Jakarta, on Tuesday (5 May 2026).<\/p>\n
BI notes that the rupiah has weakened by 3.65 percent since rising\ngeopolitical tensions in the Middle East.<\/p>\n
To safeguard rupiah stability, BI has prepared seven policy steps\nthat have also received approval from President Prabowo Subianto.<\/p>\n
\u201cWe reported to the President and the President approved and then\nprovided seven important strengthening steps that BI has taken to make\nthe rupiah strong, to stabilise the rupiah going forward,\u201d Perry\nsaid.<\/p>\n
The first step involves intervention in the foreign exchange market,\nvia spot transactions and Domestic Non-Deliverable Forward (DNDF)\ninstruments domestically, and Non-Deliverable Forwards (NDF) in offshore\nmarkets such as Hong Kong, Singapore, London, and New York.<\/p>\n
\u201cThat is our coordination with the Minister of Finance, ensuring\ninflows from foreign portfolio investments remain year to date and\ncontinue to reinforce the rupiah,\u201d Perry added.<\/p>\n
The third step is BI continuing to buy government securities (SBN) on\nthe secondary market as part of fiscal-monetary policy synergy. To date,\nBI\u2019s SBN purchases have reached Rp 123.1 trillion year to date.<\/p>\n
The fourth step sees BI, together with the government, maintaining\nadequate liquidity in the banking system and money market, reflected in\na 14.1 percent growth in the monetary base.<\/p>\n
\u201cInside the country, the market for the Chinese yuan and the rupiah\nhas developed domestically. Because our local currency and the yuan are\nclosely linked, and a domestic yuan\u2013rupiah market is forming, this\ndiversifies away from the dollar and can strengthen the rupiah,\u201d he\nadded.<\/p>\n
The sixth step involves stronger offshore interventions using the NDF\ninstrument, engaging domestic banks to boost foreign exchange\nsupply.<\/p>\n
The seventh step is BI increasing supervision of banking and\ncorporate activity with high demand for US dollars.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/rupiah-under-pressure-middle-class-and-the-state-budget-also-affected-1779542687", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }